Aurora Loan Services has been dishonest to me in trying to keep my home. They won't allow me to do a mortgage modification and just snub their nose at me when I try to diligently work with them.

A New York Lawsuit With Promising Implications for Chicago Homeowners
January 6, 2010

Posted In: Foreclosure Defense, In The News, Mortgage Foreclosure Update
By Sulaiman & Associates on January 6, 2010 9:27 AM | Permalink

In November 2009, the Legal Aid Society of New York filed a class action suit against Aurora Loan Services, L.L.C., Timothy Geithner, and other Federal officials. The suit, filed in the U.S. District Court for the District of Columbia, takes an interesting approach.

First and foremost, any individual who is eligible for a loan under the Federal Home Affordable Modification Program (HAMP), and whose loan is serviced by Aurora is likely a member of the class. This means that an untold number of borrowers in Chicago, greater Cook County, and across the state of Illinois may be part of the class. Some of our own clients may very well fall within the class. At some point in the future, those whose loans are serviced by Aurora may very well receive a notice telling them that they may opt-out of the class if they wish to pursue their own lawsuit.

More thoughts on the complaint after the jump.

The complaint itself is fifty-one pages of light reading. In order to spare you the full read, here's our back-of-the-napkin take on what the Legal Aid Society is claiming.

HAMP is a program that stems from the Troubled Asset Relief Program (TARP). Its goal is to get eligible borrowers into trial loan modifications, that ultimately convert to permanent loan modifications. In turn, this allows borrowers to keep their homes. As we've mentioned before, the HAMP program hasn't been a resounding success so far. A very small number of applications actually convert to permanent modifications. According to the Treasury, only 31, 382 mortgages out of 759, 058 trial modifications have converted to a permanent modification.

The Legal Aid Society's complaint places the burden of this failure on lenders like Aurora and Federal officials. It notes that mortgage servicers that participate in HAMP must sign a contract with Fannie Mae "as Financial Agent of the United States Government." (Complaint p. 3-4.) This contract describes the process and guidelines for the HAMP program. Among other obligations, servicers must evaluate non-Governmental Sponsored Enterprise loans for the program, forestall any foreclosure filings for home owners attempting to participate in the program, and must not offer forebearance agreements or require borrowers to waive legal rights. (Complaint p. 3-4). The complaint continues to outline ways in which Aurora allegedly violated its contract.

The complaint also takes Treasury and Fannie Mae officials to task for failing to implement procedures that protect the due process rights of borrowers. It points to a supplemental directive that only took effect on 1 January 2010 as evidence of this lack of procedural protection. Prior to the beginning of this year, servicers that had signed a HAMP contract were not required to provide detailed reasons for denial of a loan modification. This, in turn, has made it difficult for borrowers to challenge such a determination. Given the nature of the contract and the relationship of the parties, the complaint further alleges that all of this activity took place under the color of federal law. This key phrase is how the complaint attaches its due process claims to a private entity (Aurora) and a quasi-Governmental entity (Fannie Mae).

All of this background leads up to what I consider the most interesting and novel approach the complaint takes -- establishing standing for the named plaintiffs and the rest of the class. Since home owners do not sign this HAMP contract, they cannot normally enforce that contract. However, the complaint argues that the home owners are the intended third party beneficiaries of the contract. The contract may provide some benefit to the servicers and Fannie Mae, but the intention of HAMP was to assist home owners. In turn, this makes the home owners intended beneficiaries of the contract. Because the home owners have a vested interest in the benefits of the contract, they also have a right to sue to enforce the contract.

This represents a very interesting legal argument -- something that would likely have been poo-pooed as interesting legal theory, the domain of a student comment in a law review, not the lynch pin of a Federal class action lawsuit. It also begs the question -- what other servicers have signed these HAMP contracts? The complaint mentions that 60 banks have signed up. If this has legs, it is very much worth pursuing on a local level. Suing Federal officials may not ever lead to their personal liability (the immunity of Federal officials is a pretty specific area of Constitutional law), but holding the lenders accountable for their often byzantine approach to the HAMP process may create some leverage for individuals seeking to keep their homes.

Aurora Loan Services needs to be put out of business and give all the consumers that have lost their homes, either their homes back or monies for all the damage they have done to them.

We made our October 2009 Payment and have PROOF with a signed receipt and copies of the money orders. They refuse to accept our Proof of Payment and are considering us delinquent. It is easy to see on the Statement for November where THEY made the mistake in posting<br />
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My husband and I run our own business not by choice but by necessity. The industry we are in has tanked and there are no jobs. My job was axed and no longer deemed necessary so I started a business to generate my own income. Everything was going good until the recession hit. Now our gross sales are down by half, but I am still earning income.

In April of 2009 I knew that we were going to be in trouble with our Mortgage with Aurora Loan Services. We had never missed a payment or been late.

I had heard about the Obama Home Modification Program and called Aurora to see what I could do.

They put me in the three month temporary payment plan, cutting our payments by half. My first payment started in June of 2009 on the temp plan. So I was to make a June, July and August Payment and then hear about whether or not I qualified for the plan. I filled out all of the paperwork for the Obama plan and sent it in. I made the three months worth of payments faithfully and on time. Come August, I was concerned that I had not received any information about what to do in September so I called Aurora Loan. The woman I talked to did not seem to understand how to read her computer screen. She said that I needed to catch up on the balance or I would go into foreclosure. When I said I was on the temporary plan she said "Oh, I see it here, we have given you another month on the plan while we get the paperwork in order" I said so I make a September temp payment and she said yes. I asked if I was going to receive an official letter stating this and she said no, that there never were going to send me a letter. I asked then how would I have known that I should extend the three month temp plan to four months. And she said, well you wouldn't have known unless you called. She then said that they needed more documentation about my income so she asked if I could send in my personal bank statements showing that my company paid me and if I could send in two years work of BUSINESS tax returns. Which I did.

Two weeks later around August 26th, I get a call in the AM. The man tells me that I have been finally assigned to an underwriter and that they want to go over my expenses and income one more time. I asked if I could call back from work-so I had the financial info in front of me. I called back several hours later. I talk to a nice man, he tells me that its' great that I have been assigned to an underwriter now, and that everything looks good. I tell him that a few of my expenses have been reduced and that my income is still the same. He takes all of this information down. He tells me that I should receive an answer about the Obama Home Modification plan by November 26th. And then he tell me to continue with a 5th and 6th temp plan payment. He said that everything looked good-I was faithful in my payments, I was a nice person and I was trying very hard to work out this problem.

This morning, Sept 2nd, I receive a call from Aurora Loan Services, the man tells me that he needs to go over my financial information. I said well we just did that. So we start to go over it again-in the middle he says-"Oh I pulled up a computer screen here and we DENIED your Obama Home Modification plan on August 26th." I tell him about all of the other calls I have had, the other information I was given and he says that I was sent an denial letter on August 26th, which I have not received.

I ask what about the Sept 2009 4th temp plan payment, he says they are going to refuse it. So then we get into about my financial statement. He says that the underwriter says that I lied, and that my income on paper vs what I said on the application is about half. This is not the case, I did not lie, I have the income on paper to prove that what I said and what is on paper is the truth. Then he said that what I was telling him today about my expenses has DRASTICALLY changed since April. I told him-yes I told that to the person that I spoke with on August 26th, that I was happy that I got quite a number of my expenses under control and that I was not paying as much for medical co-pays (i had a big co-pay for my medication and I got the pharmaceutical company to pay for it) I had told this to the man on August 26th and he said he wrote that all down. This man today told me that it was not on his screen so I must be lying. I also had told the man that I told them on August 26th that I got into payment programs with my credit cards so that I am paying them off very quickly so that I have more money to pay my mortgage. I told him that I am taking my situation very seriously and trying to honor my obligations. He asked me about how much I spend on food, I got flustered and said 50 dollars a month. He said well this is why we denied you, you are changing your story. I said, I meant about 50 to 60 dollars a week, we shop at Aldi. He got mean and said what about clothes. I said I don't have the money to buy clothes and if I need to then I shop at the thrift store. I never put on my application that I spend money on clothes. He said you put down that you spend 300 a month on your car and your car payment. I said, no way, we have owned this car for many years, there is no car payment, the insurance is about 80 bucks and we fill the tank up about twice or three time so that is like another 90 bucks. Again he said see you are changing your story. I was like what?

Then he had the nerve to talk down to me and tell me that I made the CHOICE to be self-employed. And that you know "I have a W-2 job here at Aurora Loan, that is steady so you should be open minded and go look for a job." I got really upset and starting crying. I look for job non stop, I have sent out resume after resume after resume. My husband looks for jobs all day. I sit every morning before work and scour every ad, every gig, every job, I network non stop.

So now we are in a forebearance plan. For 6 months. The payment has gone up 500 dollars. At least we have that but we were hoping for the Obama Plan.

I know I owe this mortgage company the money. I understand that-but I have been honest and tried to work this out. My husband and I took a worn out-should have been torn down inner city 109 year old home and completely restored it. We re-financed several times to be able to do this. I know things will be better down the road but we don't want to lose our home and that is why I was trying to work things out.

I think whole-heartedly that Aurora Loan Services (which is owned by Lehman Brothers) took the bail out money for the US government and does not wish to honor Obama Plan. I think that they hire these people to fluster you and talk down to you to try get out of it. This guy told me that my income does not support the percentages, which it does, I figured out that math. They are overwhelmed and don't have any clue from one person to the next what is going on.

At the end of the day on my mortgage if I had paid every cent that I am supposed-this company would have made close to $540, 000 off of the interest on my loan over a 30 year period. I believe 100 percent that they do not want to lose that money so they took the bail out money and do not want to lose the money from their mortgages either.